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New Zealand Oil & Gas Executes Perth Basin Farm In Agreement With Triangle Energy

Posted on 17 January 2023

  • New Zealand Oil & Gas executes binding Term Sheet with Triangle Energy
  • Acquiring a 25% interest in Triangle’s L7 and EP 437 northern Perth Basin permits
  • Low upfront entry cost, with 3 exploration wells aimed to be drilled in 2024
  • Recently acquired 3D seismic survey covers highly prospective Early Permian gas trend
  • Agreement subject to conditions, including final due diligence and regulatory approvals

 

New Zealand Oil & Gas Limited (NZO or the Company) is pleased to announce that it has executed a binding Term Sheet with ASX listed energy company, Triangle Energy (Global) Ltd (Triangle) (ASX: TEG), to farm into a 25% participating interest in Western Australian onshore Production License L7 (L7) and Exploration Permit EP 437 (EP 437) (together, the Permits).

After completion the Permits’ joint ventures will comprise Triangle (50% and Operator); NZO (25%) and, subject to completion of their own farm in agreement, Talon Energy Ltd (Talon, ASX: TPD: 25%).

As consideration for its 25% interest in L7 and EP 437, NZO will contribute A$1.9 million towards past expenditure on the recently acquired Bookara 3D seismic data, upon satisfaction of a number of conditions precedent customary for transactions of this type, including final due diligence and the execution of formal farm in and joint operating agreements. The payment is to be made prior to 17th March 2023 (upfront costs).

In addition to the upfront costs, NZO will fund the following exploration activities as part of its farm in obligations:

In respect of the 1st well on L7 (forecast to be drilled in 2024, at an estimated cost of A $7.5 million):

  • 50% of well costs, up to A$3.75 million; and
  • Should total well costs exceed A$7.5 million, NZO to fund 25% of the excess (being NZO’s working interest)

In respect of the 2nd well drilled on L7 (forecast to be drilled in 2024, at an estimated cost of A$7.50 million):

  • 37.5% of well costs, up to A$2.81 million; and
  • Should total well costs exceed A$7.50 million, NZO to fund 25% of the excess (being NZO’s working interest)

In respect of the well to be drilled on EP 437 (forecast to be drilled in 2024, at an estimated cost of A$3.0 million)

  • 50% of well costs, up to A$1.5 million; and
  • Should total well costs exceed A$3 million, NZO to fund 25% of the excess (being NZO’s working interest)

The exploration wells will target the highly prospective Early Permian-aged reservoirs identified by the Bookara 3D seismic survey, which are analogous to recent discoveries in adjacent permits, including Lockyer Deep, Waitsia, West Erregulla and South Erregulla.

The cost of all existing rehabilitation and restoration obligations for L7 and EP 437 are to be borne exclusively by Triangle.

Chief Executive Andrew Jefferies says entry to the Perth Basin via farm in to L7 and EP 437 provides low-cost exposure to onshore prospects in an exciting area with joint venture partners the Company knows well.

"We have been looking to make an entry to the Perth Basin for some time. It is a an exciting province with many large gas discoveries and new production coming on into a growing market. Our technical team identified L7 and EP 437 as high-potential areas for hosting significant gas fields and the new 3D seismic is the right tool to de-risk the deeper Early Permian gas reservoirs. We look forward to working closely with the joint venture to unlock the potential of these two permits which have the potential to drive meaningful shareholder value.”

“The exploration opportunities are in Australia, where we have production from our Mereenie, Palm Valley and Dingo fields, supplying gas into the East Coast gas market where prices are strong. Triangle are Perth Basin experts whose scale, culture, values, and technical skillsets are an ideal fit with ours. Like New Zealand Oil & Gas, Triangle values clean burning locally produced natural gas as a key part of the transition to a low carbon future in Western Australia; providing energy to the mining operations that will power the worlds e-future as well as cooking those West Australian lobsters on the barby.”

New Zealand Oil & Gas Chief Executive Andrew Jefferies says the farm in fits the company’s strategy.

“With this farm in we are continuing to execute our Board’s strategy. It utilises our cash and balance sheet strength, in one of our target geographies areas and in acreage with an excellent technical risk reward balance. With exploration success, there would be multiple development and production pathways to growth.”

NZO will fund the upfront costs and future farm in costs from current cashflows. Triangle will be appointed Operator of the joint venture once established. Details of the farm in terms